The act of giving money, property or other material goods to a another party in exchange for future repayment of the principal amount along with interest or other finance charges. A loan may be for a specific, one-time amount or can be available as open-ended credit up to a specified ceiling amount.


The terms of a standardized loan are formally presented (usually in writing) to each party in the transaction before any money or property changes hands. If a lender requires any collateral, this will be stipulated in the loan documents as well. Most loans also have legal stipulations regarding the maximum amount of interest that can be charged, as well as other covenants such as the length of time before repayment is required.

Loans can come from individuals, corporations, financial institutions and governments. They are a way to grow the overall money supply in an economy as well as open up competition, introduce new products and expand business operations. Loans are a primary source of revenue for many financial institutions such as banks, as well as some retailers through the use of credit facilities.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Guarantor

    A person who guarantees to pay for someone else's debt if he ...
  3. Creditor

    An entity (person or institution) that extends credit by giving ...
  4. Grace Period

    A provision in most loan and insurance contracts which allows ...
  5. Paydown

    This occurs when the amount a company or government repays in ...
  6. Loan Syndication

    The process of involving several different lenders in providing ...
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